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Sales by multi-product retailers


  • Timothy J. Richards

    (Morrison School of Agribusiness, Arizona State University, Mesa, AZ 85212, USA)


This paper examines the rationale underlying periodic price promotions, or sales, for perishable food products by supermarket retailers. Whereas previous studies explain sales in a single-product context as arising from informational, storage cost, or demand heterogeneity, this study focuses on the central role of retailers as multi-product sellers of complementary goods. By offering a larger number of discounted products within a particular category, retailers are able to attract a sufficient number of customers to offset the effect of lower margins on sale items by selling more high-margin items. The implications that emerge from the resulting mixed-strategy equilibrium are tested in a product-level, retail-scanner data set of fresh fruit sales. Hypotheses regarding the rationale and effectiveness of sales are tested by estimating econometric models that describe (1) the number of sales items per store, (2) the depth of a given sale, and (3) promotion effectiveness on store-level demand. The results of this econometric analysis support the hypothesis that the breadth and depth of price promotions are complementary marketing tools, thus explaining how EDLP and HI-LO store formats can exist in the same monopolistically competitive market equilibrium. Copyright © 2006 John Wiley & Sons, Ltd.

Suggested Citation

  • Timothy J. Richards, 2006. "Sales by multi-product retailers," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 27(4), pages 261-277.
  • Handle: RePEc:wly:mgtdec:v:27:y:2006:i:4:p:261-277 DOI: 10.1002/mde.1251

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    References listed on IDEAS

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    Cited by:

    1. Marcelo Delajara & José Antonio Murillo Garza, 2012. "Weekday with Low Prices: Evidence on Daily Seasonality of Foods, Beverages, and Tobacco Prices," Working Papers 2012-09, Banco de México.
    2. Hoffman, Angela & Senkler, Heike, 2011. "Interformat price competition of multi-product retailers: Evidence for German grocery retailing," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114533, European Association of Agricultural Economists.
    3. Ebbing, Alexandra, 2012. "Verkaufsförderung Im Lebensmitteleinzelhandel: Empirische Analyse Im Raum Giessen," 52nd Annual Conference, Stuttgart, Germany, September 26-28, 2012 137145, German Association of Agricultural Economists (GEWISOLA).
    4. Lan, Hao & Lloyd, Tim A. & Morgan, C. Wyn, 2013. "The hazard function of sales: An analysis of UK supermarket food prices," 87th Annual Conference, April 8-10, 2013, Warwick University, Coventry, UK 151972, Agricultural Economics Society.
    5. Hansen, Kristin & Loy, Jens-Peter, 2007. "Multiproduct Food Retail Sales: A Case Study for Germany," 2007 1st Forum, February 15-17, 2007, Innsbruck, Austria 6568, International European Forum on Innovation and System Dynamics in Food Networks.
    6. Sebnem Bahadir-Lust & Jens-Peter Loy & Christoph R. Weiss, 2007. "Are they always offering the lowest price? An empirical analysis of the persistence of price dispersion in a low inflation environment," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 28(7), pages 777-788.
    7. Jens-Peter Loy & Christoph R. Weiss, 2009. "Sales by multi-product retailers: a comment," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 30(8), pages 513-515.

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